Plans by Sir Anthony O'Reilly to take control of Australia's main newspaper group, Fairfax, were given a boost yesterday when the Australian government said it was considering a major relaxation of media cross-ownership and foreign-ownership laws.
In July, Sir Anthony signalled his intent to make a bid for Fairfax when Australia's richest man, Mr Kerry Packer, sold his 14.9 per cent stake in the company thus making it ripe for takeover.
Sir Anthony has been considering plans to use APN News & Media, in which Independent News & Media has a 41 per cent stake, and possibly Independent's wholly-owned Wilson & Horton subsidiary in New Zealand, as vehicles for a takeover bid. But most observers believed the tough cross-ownership and foreign-ownership laws in Australia would ultimately scupper the bid.
Under the existing legislation, Sir Anthony would have to convince the Australian authorities that APN is a truly Australian company and free of outside control. A direct bid by Independent would not be permitted.
Yesterday, that major obstacle appeared to have been greatly diminished after Australian Communications Minister Senator Richard Alston said the Australian government was in favour of a major relaxation of the laws. He added the matter has been discussed in depth at cabinet level.
"We have given the matter very serious consideration," he said in Canberra. "We would consider a comprehensive review of both the cross-media and foreign-ownership rules."
Senator Alston added the Australian government would attach a number of conditions to any exemptions or changes to the current legislation. He said the government would be prepared to grant exemptions in respect of cross media if it obtained undertakings that companies would maintain existing levels of locally produced news and current affairs in respect of radio and television and that separate and distinct editorial processes were put in place.
"But we would also be prepared to repeal the media-specific provisions in the Broadcasting and Services Act which apply to both free-to-air television and pay-television. We would also be prepared to wind back the percentage limits on print that are currently in place," he said.
His comments took Australian financial markets by surprise as most analysts expected no movement on the issue until after this year's federal election.
If Sir Anthony's bid goes ahead it will be the second time in a decade he has made a pitch for the company which owns three of Australia's premier titles: the Age, the Australian Financial Review and the Sydney Morning Herald as well as Australia's premier internet publishing company F2.
On that occasion, a consortium headed by Independent News & Media lost to a rival bid from a consortium headed by the Daily Telegraph's Mr Conrad Black.
Fairfax has a market capitalisation of three billion Australian dollars. Yesterday Fairfax shares rallied gaining 1.2 per cent to Aus$3.99 after having been softer before Senator Alston's remarks.
